Are you or any your children currently enrolled in college? If so, here’s a great tax tip you can take advantage of for some 2015 tax savings.
If you qualify for the Lifetime Learning or American Opportunity credits but don’t have enough qualifying expenses to max out the credit for 2015, consider prepaying tuition bills due early in the new year. You’re allowed to claim a 2015 credit based on prepaying tuition for academic sessions that begin in January through March of 2016.
The maximum American Opportunity credit is $2,500 per student, but it's phased out if your 2015 modified adjusted gross income (MAGI) is too high. The 2015 MAGI phaseout range for unmarried individuals is $80,000-to-$90,000. The range for married joint filers is $160,000-to-$180,000.
The maximum Lifetime Learning credit is $2,000 per tax return, but it's also phased out if modified adjusted gross income is too high. The 2015 MAGI phaseout range for unmarried individuals is $55,000-to-$65,000. The range for married joint filers is MAGI of $110,000-to-$130,000.
Why the range? If your modified adjusted gross income is within the phaseout range, you can qualify for part of both the American Opportunity and Lifetime Learning credits. But if your MAGI exceeds the top of the range, your credit is completely phased out.
Many other rules apply to these credits – we can help you figure out if you qualify. Click here to contact us.
It's almost 2016 - are you still concerned about your 2015 taxes? Check out our prior year end tax tips, or call us for custom advice for your business or personal tax returns.